Zyad Muhammad Nuri

Rentier state term has widely been used by scholars to define those states, whose economies largely depend on external rent. Particularly, oil-rich states in the Persian/Arab Gulf are referred as rentier states. Reliance on a natural resource as the main component of state income has extensive economic and political consequences. This study aims to assess the economic consequences of rentier state structure on the Kurdish Regional Government of Iraq (KRG). While the existing literature on rentier state mostly focus on sovereign states as case studies, this study seeks to diverge from the existing literature through concentrating on a regional administration as its case. The study attempts to answer two critical research questions: Is it possible to apply the rentier state approach to the KRG as a regional administration? What have been the economic consequences of rentier state characteristics on the KRG? It was after 2003 that the KRG was able to integrate its economy to global economy which led to a considerable economic growth. Yet, since then, its economy has experienced negative side effects of over-dependence on oil exports such as the lack of diversification of its economy. In this regard, it is argued that the KRG reflects the characteristics of a rentier state. The main components of income have been oil revenues and the federal cash budget from central government of Iraq. The oil export consists more than 90% of the government’s revenues. The local economy and taxes do not make any meaningful contribution to government’s annual budget.[1]
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